House panel endorses its version of bill banning contractual labor practice

Published August 1, 2020, 7:03 PM

by Ben Rosario

The House Committee on Labor and Employment has finally endorsed for immediate plenary approval its version of the bill banning the exploitative “contractualization” or end of contract (endo) practice in the private sector.


The House panel chaired by 1PACMAN Partylist Rep. Enrico Pineda batted for the passage of House Bill No. 7036 to be known as the Security of Tenure Act.  

A consolidation of eight different legislative proposals, HB 7036 seeks to amend Presidential Decree No. 442 or the Labor Code of the Philippines.  Authors include Reps. Michael Edgar Aglipay (DIWA Partylist); Jose Christopher Belmonte (LP, Quezon City); Arlene Brosas (Gabriela Partylist) and Bayan Muna Reps. Carlos Isagani Zarate, Eufemia Cullamat and Ferdinand Gaite, among others.

Pineda said the bill is part of the legislative priorities of the Duterte administration, noting that the chief executive has vowed to take action against the exploitative system of labor-only contracting in the country.

HB 7036 prohibits labor-only contracting but grants the Secretary of Labor, after consultation with the National Tripartite Industrial Peace Council, to make appropriate distinctions between labor-only contracting and legitimate job contracting.

The law provides that labor-only contracting exists when 1) the contractor does not have substantial capital or investment in the form of tools, equipment, machineries in the work premises; 2) the contractor has no control over the workers’ methods and means of accomplishing their work or; 3) the contractor’s workers are performing activities which are directly related to the principal business of the employer.

The bill also provides for the licensing of job contractors and will penalize persons engaged in such practice of recruitment without the required license.

Pineda said the proposal also declares that violation of substantive or procedural due process will be considered an act of illegal dismissal.

Under the bill, administrative penalties of fine or closure of business may be imposed on those engaged in end-of-contract arrangements and labor-only contracting.

Further, the bill mandates regular employment as a general rule and prohibits “fixed-term employment except in the cases of overseas Filipino workers, workers on probation, relievers who are temporary replacements of absent regular employes.

In the case of relievers, their engagements shall not exceed six months.

HB 7036 mandates that the rights and benefits of relievers, project and seasonal employees are at par with regular employees as observed in the principle that all workers must be treated equally and must enjoy equal rights and obligations.